oooh, i get it moment but microsoft has a way to go. dow is currently down some 54 points. get it all put into perspective by wapner. the "fast money" team back at hq. see you tomorrow. all right, carl. thanks so much. welcome to the "halftime show" folks. here's where we stand. the market at the lows of the day. the dow down 56 points. s&p is down nearly one-half of 1%. nasdaq is in negative territory. here's what we're following on "halftime." man versus machine. why super fast trading is good for your money. retail rivals. investors size up target and walmart after both companies report earnings. which company is your best best with the holidays around the corner. cliff diving. the dow dropped 1,000 points in the past month as fears over the fiscal cliff have come to the

forefront. can washington rise above and make a deal or will your money pay the price? we welcome in tara fagan. julian epstein, a former congressional leader. good to have you both with us. sarah, i'll begin with you. evidence of what we're seeing on wall street. the markets not waiting around for a deal. it's seen this movie before. are we going to get a deal or not? >> it has seen this movie before, you are right, scott. i think we will get a mini deal. it is likely that lawmakers will walk right up to the cliff, right up to the christmas holiday. they will put together some patch work deal and punt the bulk of the work until next spring. probably with some specific dead linings. >> julie en, i don't be know if that will be acceptable or not to the market. you can see how we've been sliding almost daily as we worry about what's happening with the cliff. the president seems to be sticking to his guns and so, too, is the senate majority leader harry reed. social security is not even on the table. can we get a deal without

entitlements on the table? >> we can't get a long-term deal without them being on the table. i think sara is right. you don't have enough time between now and january 1st to get a real comprehensive deal done. what is likely to happen is you will get can kicking down the road continuing resolution probably sometime in december that will take this out as sara says, out to march or april or the summer. ultimately there will be a deal because both parties have every interest to get a deal done. neither party wants to see the economic impact of a deal not getting done. >> why the heck, sara, is it so hard to get a deal done? the market, the people who watch the show, the money is hanging in the balance. stock market goes down almost daily for the sole reason that lawmakers in washington can't get their you know what together and make a deal. >> that's right. part of the problem, you have people with legitimately very different viewpoints on what is necessary to grow the economy. some of it's politics of course.

you've got leadership in the republican party and the democratic party that are watching their left and right flanks but ultimately i do think that there has been a lot of talk here in recent days in very careful language by both sides that will allow them to come together, avert the cliff, avert the see quester and do the grand bargain that was talked about last year sometime late next spring with entitlement reform and with tax reform. even republicans, there's lots of stirring among republicans about a recognition of a need for revenue, figuring out a pathway to get there without raising tax rates. we'll see if the president goes along with that. he's pretty rarely used raising tax rates. he has talked about raising revenue. those are two very different things as we know. >> how about that, julian. should democrats be happy if they get the revenue raised? does it matter where it comes

from at the end of the day? >> i think mathematically it's very difficult unless you go back to the bush tax cut. the whole idea of the sledge hammer that's known as the fiscal cliff was brought to you by the republican party. they wanted it as a condition on the debt ceiling. at that point they had the leverage because you needed congress to move on the debt ceiling. now it's obama who has the leverage. if you doing in nothing, tax rates go up on everybody. not just the top two%, but everybody. in terms of the substance, everything has to be in the mix. that's what every debt commission from simpson bowls on down to rugman, you have to have the right mix. the two most important things on entitlements that really deal with health care, you have to deal with end of life decisions, you have to deal with fee for service. if you don't deal with those things it's very difficult to get entitlements controlled. on taxes the arithmetic is simple.

right now we're at 24% of gdp in terms of spending. talks are at 15%. paul ryan called for spending -- >> the problem julian -- >> let me finish the point, if i may, sara. paul ryan called for 20% of gdp. you can't close the gap even if you use the republican's budget figures, you can't close the gap without some kind of revenue and you can't get the revenue simply by closing loopholes. >> i don't think that's true. i think the bigger challenge here is the math doesn't work for the president either. he's talking about a $1.6 trillion revenue rate. even if you raise the rates. even if you close some deductions, you don't get there. so the little secret here is that the taxes are going up not just on rich people, they're going up on everybody. i think intuitively the american people know that. here's where i really disagree with julian. on the president's legacy. you say the president is in the

driver's seat. perhaps that's true, but i think more likely having worked in the white house, what happens when these folks are re-elected is they immediately think about their legacy. does president obama really want middle class americans to see their tax rates go up even if temporarily and potentially a recession? that will be on his watch. >> it'll also be on the republican's watch. >> right. but he's the leader. he's the one with the bully pulpit. >> but he's made it very clear that he doesn't want taxes to go up for 98% and if congress doesn't act and in particular the house doesn't act, the senate is prepared to do that. if the house doesn't act, i don't think they will win that argument, one. point two is in terms of getting to the deficit numbers, it's not just revenues. if you go back to where the president was in august of 2011, he was willing to go for every $3 in spending cuts $1 in revenue. the way you get at the $1.6

trillion figure is by getting into significant entitlement reform. and everything as he has said, the president has said is on the table. medicare and medicaid, they're on the table. we know where the big targets are there. end of life decisions and big target is fee for service. that's where the money is. >> the fact of the matter is we'll have to pick this up at some other point. as i said at the top, the markets aren't sticking around to see what happens. we're already selling ahead of that. my thanks to both sara fagen and julieweulian epstein. i interest vaders here with me. grasso, what's the mood like down there as you guys are trying to do business making trades knowing that the stock market is falling because we have no deal? >> well, you just heard the tone, right? that's a lot of what's going on in d.c. there's going to be an agreement, they have to start meeting after thanksgiving. it has to be graded by the cbo.

it has to be voted on. you're not going to get there. you're only going to get there with small ball. if you don't have a grand bargain, we already heard from s&p that our debt is going to be downgraded again. so now you have the downgrade coming, you have fiscal cliff, you have a whole bunch of issues that there's going to be no agreement on. there's no reason to rush in and buy stocks, right? >> even if we get a can kick, right? if we believe that we're going to get something by the end of the year or maybe just after the first of the year, if we're going to get something, why not trade the market here? why not buy some stocks that have been hit hard. >> you're definitely at the lower end. in the s&p at 1349, the next level of support is 1340. your risk reward is to be buying the market. every time we bounce we wind up selling that bounce. we're talking about a debate, you had two guests just talk about a debate about raising taxes. that only grabs you 80 billion from the top income earners.

we're talking about 1.6 trillion of a problem. >> everything has to be on the table, josh brown. we're trying to figure out what the heck to do in the market, how do you make your decisions whether to buy stock here? >> the way we respond is to take a look at the markets here. what are trends telling us? what they're telling us is the bears are in control at the moment. there will be a bounce at some point. a lot of those bounces have faded. for us, we'd rather be liquid. we've been mentioning that on the show. it's not perma bearishness. when things change, we can move. that's been the posture. i will say the only overweight we still maintain is health care. we think that acts the best on the way out of this thing even though over the last month the sector has been down 6%. >> you have a more defensive bent. stephanie link, has this debate and the rancor around it and the inability of our leaders to rise above, has it killed any hopes

for a year-end rally? >> well, yeah, certainly if we don't get a fiscal cliff resoluti resolution, certainly. >> is it off the table? >> it depends if we can get something. if we get a can kick i do think we can rally. i think what you need to do in this environment now is hold fewer positions, definitely have a little bit more cash. take some profits where you can. we've been doing that. home depot, wire houser. we sold some ebay today. you need to look at names that have gotten hit hard. go back to something like a coke, something like a verizon, go back to companies that are doing self-help. eaton is buying coopers. starbucks, i liked that deal last night. they're buying growth at an attractive price. i still think that dmien is a long-term theme and you can be buying those. >> we'll hear interest all of the traders certainly coming up. also, we're going to hear from former house majority leader dick gephardt who says the market could plummet if there's

no deal. mr. gephardt is going to join us a little bit later on for some insight on what could happen if it all goes down. meantime, apple continues its tumble today. let's get a market flash with bertha. >> thanks, apple falling to a six-month low. could this be near the bottom? we certainly seem to have hit the top in september over the iphone 5. if apple closes at these levels, it will be the lowest close since february 27th. guys, i kind of feel responsible. i finally got an iphone. >> mike murphy, you bought shares at apple today? thanks bertha. >> we did. we kept the freem yum from selling the put. we ended up getting the stock right around $600 in the selloff. down here at these levels, 529

is what we paid this morning. looking at apple right now at ten times earnings, from a risk/reward standpoint, there's no place i'd rather be is apple. we bought more this morning. >> dock, what do you think? >> i bought it last week at 537 last week. i like the stock at these levels. i bought with enough protection by owning the leap call and selling a two to one spread above the market that it brought me some credit. >> can you explain to folks who are wondering what a leap call is? >> a long-term option. 1,000 shares of apple is $537,000. i instead bought a leap call that was only about 1/10 of that, used that as the surrogate for stock and wrote the calls above the market. to bertha's point, there are 32 million of you who bought the iphone. you're not alone. it wasn't just you. all right. coming up on "the half" it's the

tale of two discount retailers. are you better off in walmart or target. we list the sectors to sell as we head into the end of the year. lots more "halftime report" to come. looking for a better place to put your cash? here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms,

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welcome back. the tale of two retailers as target shares rise on better than expected earnings. walmart is a buzz kill for the dow. the disappointment in the walmart is the u.s. comps in expectations? >> yes. >> you own both. >> yes. i do. weekly and monthly technical charts. these are pretty different reports. i think it's really simple. let's not make it overly complicated. target beat and raised. walmart did the number. forward guidance was lackluster.

they had a lot less exciting things to say qualitatively. people are lnl making the shift between the two. >> is it time to do that? walmart's had a good year. it's in the top third in terms of dow performers. time to bail on walmart and pick up target? >> walmart has some protection. before selling i would wait to see if it can hold that level. what's interesting about target is that everything they're doing strategically seems to be working. the move into canada. the store branded credit cards. the loyalty programs. they're all firing on all cylinders in every way. i like both, but if i were to buy one over the other i'd probably go with target right now because they seem to have this moment in time figured out. >> which, murph, you added to target today why? >> josh touched on it. the canadian segments. if you line up walmart's results versus target's results, target beat them in just about every single category. if things get worse, if the

economy falls into a recession i think you're all right in a target because the discount retailers should do well. but canada, if we get this resolved, the market rebounds, canada could be the push to get target over the edge. >> how about the dollar stores, link? if you don't want to be in either of these names or even if you're already in them for that matter, what's the read on the dollar stores based on what you've heard today. >> we had a good report today relative to expectations. that's what's going on here. walmart was the darling and a lot of people liked it. they did actually kind of juice up their story a little bit at the october analyst meeting. dollar tree, the stock's gotten hammered. down 30% since july. trading 13 times forward estimates. they're doing good. they said comps in the quarter improved each month in the quarter which i thought was improving. we own dollar general. that's gotten hit. down 15% from the july high. >> all right. the nasdaq is in correction

territory in case you haven't noticed. dow and s&p not that far behind as investors continue to fear the fiscal cliff. where should you be putting your money right now? let's ask jeanette adams. welcome back. >> thank you. >> how concerned are you about the cliff? is it changing the way we should be allocating money right now? >> i'm pretty concerned about the cliff in combination with continued deterioration in the european economies it's, in my opinion, resulting in an investment recession in the united states already. we're not in recession technically as an economy on the whole. the business investment accounts are turning negative. probably will contract from growth in the fourth quarter. that's detrimentally impacting sectors like technology and industrials. >> josh is fairly defensive. he likes health care. that's one of the areas that you highlight as well. it appears from your sector weightings that you're pretty defensive. consumer discretionary staples, health care where you want to

be. >> we've been in an increasing defensive position. we started to move defensively. most recently this week we've downgraded technology to underweight. we've downgraded the media segment to discretion marry. media looked a bit rich and technology was just awful in the third quarter. in combination with the economic trends we're getting more defensive. i think you can hide out in some of the more earning stable names. you have pretty decent names in staples and discretionary. >> your expectations for technology, you don't think that's come down enough and if we get a fiscal cliff resolution, you'll get these companies spending again. what is your thought there? >> i think in terms of the absolute earnings reduction, i think we're quite frankly only halfway there. the consensus is expektding 12% growth in 2013. we have something closer to 4. while we've seen some revision

moments, certainly tech is one of those segments, i think we're only halfway there. the longer the fiscal cliff issue remains outstanding, the longer the business investment slump becomes. the more widespread it becomes. this is certainly a concern going into december and i think you really want to avoid that risk until you get resolution on the fiscal cliff and we get an idea as to what that resolution is exactly. that's critically important to the economic outlook. you might get a little bounce. let's say we finally do get resolution. then we have to assess the economic impacts of the agreement and i think that that's critical going into the fourth quarter. >> gina martin. doc, look, i get all the doom and gloom. the market tells the story of what's happening. is there a danger in getting too negative right now about the market? if you get any sniff of something coming good out of washington -- >> we could see a snapper rallies when you get oversold

because people are piling in so heavy. today, judge, i saw four big blocks of 10,000 blocks hitting in the spider. that's not the institutional product, that's the s&p 500. this is the retail product. when you've got retail panicking like this, buying 10,000 lots at a time of puts. that tells you there's so much fear in the market that you probably are setting up for a snapper. i don't want to be short when it's happening. >> vix telling you anything? that's somewhat compelling. >> i think a little bit of what bob passani said is true. now those puts are deep in the money puts because with the index falling from 1400 and change down here to 1350, those puts $50 in the mown as they're selling those puts. that panic to buy them isn't there except, like i say, in the retail space. that's why i worry about that snap back. >> coming up on "the half," from

a fast food giant to insurance powerhouse, we have the top three trades. after rallying, has gnat gas topped out? we're making a pit stop to find out next. ♪ [ engine revs ] ♪ ♪ [ male announcer ] the mercedes-benz winter event is back, with the perfect vehicle that's just right for you, no matter which list you're on. [ santa ] ho, ho, ho, ho! [ male announcer ] lease a 2013 c250 for $349 a month at your local mercedes-benz dealer.

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welcome back to "halftime." look at the wall here. you will see the shares of net app getting a big rise. they gave a strong outlook as well. going to buy back another $1.5 billion in stocks. j.b. >> this is a name i've liked. what's important to realize is what's moving the stock is not the earnings, it's what they've said about the go forward period. it's tough to trust this company. we've seen them have a few miss steps. i don't know if i love this boujs. i'd probably trade it if i were trading in. >> get a look at aig. the stock is up more than 1%.

15 million shares in the company. dan laub's third point, increasing its trade. stephanie link, big money getting in here. >> are we on it? i like the company quite frankly. the stock is up today but it's down 17% from its high and it's down 12% since it reported a week and a half ago. a little bit of a bounce. the quarter was mixed at best. all of the operations were better on a year-over-year basis. they fell short on expectations. it definitely was disappointing. you own this not for earnings, you own it because this is a turn around story. they're cleaning up their balance sheet and focusing on two big segments of their business, pc, property casualty and life. i would wait in getting -- in terms of buying it or getting in until after the government announces the last 15% tranche in a secondary. >> i want to get a street fight going on mcdonald's. a lot of speculation on what to

do. jan fields is the president of mcdonald's u.s.a. stepping down. what do you do with mcdonald's. >> you look at a company that's pulled back 20% and it's paying you 3.5% dividend. mcdonald's has gone straight down. they announced that sales last month were in decline so they have a lot of work to do, but you're getting a company that's on sale right here at these levels. it sold off a will the. you can start buying it here. you're getting a great dividend. i think there's up side in mcdonald's? >> agree, disagree. >> mid 70s is major support. i do agree with murph. if you want to be inbe vested in this company, you have to put on a tranche of what you're going to own. you have to start here because you could be wrong. buy a quarter, a third. >> you wouldn't do it, steph? >> very tough comparisons. maybe josh is right in the mid 70s. >> isn't there only one way to go and that's up? >> no. >> it could go down more.

>> not with comparisons. get a headline, it will be a negative number and you'll get a hit. i think you get it at a better price. >> after hitting multi-year lows gnat gas has turned out to be the comeback kid. could the run still be hitting some resistance. jackie deangeles is the host of futures now. she's monitoring the chatter in the trading pits today. gentleman beingy, what do you see? >> good afternoon, scott. natural gas prices reversing course and heading higher after a government report showed a drop in inventory. gnat gas pennies away from a one year high. with less supply and winter getting started, could gnat gas be headed to $4? this is important. gnat gas is used to heat many homes. richle chisen is at the cme and anthony is at the nymex. griz, let's start with you. >> over the last couple of days we had a report out from the natural weather service that it will be a lot colder this year

than it was last year especially february. the traders covered all the shorts in the market. you saw that rally over the last two sessions. it stalled a little bit today. there's another report that comes out every month. it shows demand for natural gas has increased over the last 12 months every single month. there's a lot of conversions going on. people are switching from coal to natural gas. the demand picture looks good. >> rich, when you look at the chart, what is more likely at this point, $4 or potentially $3.50? >> i think we get a $4 tick. gnat gas supplies are up 6% over the five-year average. if you take a look at the report, the $4 call is the biggest strike that they have. that's going to provide a bit of resistance. really if we close about 3 point be -- $3.93, they'll turn the specif spigots on, they'll capitalize.

>> gryz, how soon before we see the $4 mark? >> i think rich is right. when you look at the $4 calls on natural gas, when people buy those, they 1e8 futures against it. they need to cover those futures. i would say within the next one or two weeks, especially with the cold weather, we could see $4. >> gnat gas going higher. now you know what our guys think. do you think the high for gnat gas is in. >> log on and vote in our poll. we'll give you those results in our online streaming show at 1:00 p.m. eastern time. do be sure to log in for today's show. we'll be talking about the fiscal cliff and the market's next move with jeremy siegel from the martin school and the oil trade will be spoken about by come jack jacobs. let's go energy for a little bit. josh brown, what's going on with oil? oil is down today probably on data more than anything. you have this flare-up in the

middle east we were trans fixed by. >> i'm surprised it's not up. you're probably seeing spillover from weakness in materials and people not wanting to own what are essentially short dollar trades. people are flocking to the dollar and all of these things are priced in dollars. maybe it's as simple as that. if the israeli thing escalates, they'll say oil will get running again. it will be tough to stop it once it does. >> high frequency trading and your money. it's a story that we here on "halftime" have been all over. now it's made its way to late night. >> in high frequency trading computers can move millions of shares around in minutes earning a tenth of a penny off each share. that adds up to serious money when they finally take it down to the wall street coin star. >> coming up, a sneak peek inside one of the secretive fast trading shochs and a former washington power player is

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welcome back to "halftime." the issue of high frequency trading and its role in the market is a hot issue. bob joins us. >> high frequency trading is certainly a hot topic but there's not many high frequency traders who have ever spoken about their business until now. dave cummings is the owner and chairman of the board of trade both systems. on any given day there are typically 5 to 10% of total stock volume.

he's also part of the third largest stock exchange in the u.s. i asked him if it was possible for active traders to compete against his machine. >> oh, of course you can compete. the markets are open to anybody. i think long term investors, you know, they're just playing in a totally different time frame. their ability to analyze long-term fundamentals of the company doesn't change, but you always have somebody that's willing to provide short term liquidity to the system. >> a guy comes in, starts trading, comes home flat every day, can he compete against you? >> you know, we spent 13 years developing a good computer system and developing intellectual property around those trading systems. the notion that a guy can k50i7d of trade and just kind of do it as a hobby and compete, i'm not going to say it's impossible but yeah, in a, might be a little bit heart. what can you do in life that's meaningful without a significant amount of work behind it. >> another accusation i hear a lot is many of them engage in

trading activities that are a form of market manipulation, that they employ programs that attempt to manipulate the markets. does that happen in high frequency trading? >> the way we trade, we don't feel like we have anything to hide. i'm not going to say nobody in the industry has ever done anything that would be viewed with suspicion. there are bad apples out there. as an industry we need to seek those things that are distorting out of the system and find ways to diminish or push those guys out of the game, but i think the vast, vast majority of the volume and the firms that i know that are behind it are reputable trading styles and reputable trading strategy. >> now dave went on to say that the average retail investor he insists has benefitted from high frequency trade, that the spreads are tighter than ever. your broker charges you less than $10 for almost any trade and that it's the former middlemen, brokerage community that are complaining the loudest. more on my interview with dave

and cnbc.com on whether they manipulate the market. two things that are interesting. number one, long term traders not affected at all by high frequency trading. the guys who are day traders, they might be if they didn't have robots and systems. very carefully worded statement there on the day trading community and how it impacts high frequency trading. >> those in his words were doing it maybe as a hobby. thanks so much. that was great stuff. i'll look forward to seeing more of that. >> doc, you're one of the most outspoken critics against high frequency trading. he says, it's the argument you hear, provide liquidity. the average retail investor has benefitted. the littlest of the little guys it's awfully difficult to compete. >> i'm not holding him out as the bad guy here, but a lot of high frequencies, the quote stuffing that goes on to try to blind people to what's really going on in the market as well as the trading ahead of people for a hundredth or a thousandth

of a cent. all of that is b.s. it's got to stop. hopefully it gets addressed. the rest of it, it has worked against the regular joes and janes that invest in the market because they don't think it's a fair game. as he said, if it's a hobby then you shouldn't be doing it. well,'s right, you shouldn't be doing it if it's a hobby, but he's scared off other people who otherwise would be in the market. i know, josh, when you enter orders for clients you don't see the kind of depth that he is claiming that there is out there. >> fake liquidity. it's always been a lie because it's not going to be there when you need it. traditional liquidity, volume does not equally quit at this in the world. >> when we come back, dick gephardt on the other side of the break. can we rise above and solve the cliff? what happens to the market if we can't? that's next. ... what should we invest in? maybe new buildings?

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from the windowless headquarters of cnbc, global headquarters are medically sealed. today on ""power lunch"" both sides fight over the fiscal

cliff and who should pay up. the millions being wasted by the federal government. as the president toured the impact zone, our first look at the bite sandy is taking out of the economy. the numbers reported this morning. sue herera live from the schwab impact conference in chicago with advice on how you can protect your portfolio against the fiscal cliff. now back to scott. steve, at the top of the hour. have a bit of breaking news. we want to get out to phil lebeau. he's with sergio marcioni. >> i am. sergio marcione, the christ ler fee at man. the guy who has his fingers on the u.s. pulse and the european economy. you know how bad things can be in europe and how bad they are. you know what we're facing in the u.s. how concerned are you about the possibility of a fiscal cliff and what would happen to the auto industry if we approached that and went over that fiscal

cliff? >> the second part of your question is almost -- there are a variety of possible outcomes. i have the utmost faith in the leadership here, however, it goes beyond the question of cars. the world is truly dependent. the americans don't understand how the world looks at the stability of the market and that the u.s. will have a plan and see how other countries are doing.

[ inaudible ] >> we've been asking the ceos if they will rise above ten because that's what people want. they want everybody to rise above what's going on in washington. have you expressed that to either president obama or any of the political leaders here in this country, they need to rise above their partisan bickering and fighting and come to an agreement? >> i haven't, but i think that what you saw here today is an example -- an actual example of how the collective resolution with the shared objective can yield incredible results in a short period of time. i sincerely hope that for whatever it's worth, as little of an example as it is, that it is a lesson for people in washington. >> phil will continue with his

interview with sergio marcione. apologize if it was a little loud if you were trying to listen to what that gentleman was saying. it looked like they were in some sort of manufacturing facility. i don't think it's lost on him or anybody of the dire consequences that do exist if we do go over the fiscal cliff. that's why we've been calling on leaders in washington to rise above and make a deal on the cliff. how likely is a compromise and what could happen to your money if congress can't come to an agreement? dick gephardt is the former house majority leader. he joins us now live. mr. gephardt, welcome to "halftime." it's great to have you. >> great to be here. >> you raised a lot of eyebrows. you said the stock market could fall 1 to 2,000 points if we don't get a deal. do you believe that? >> well, eventually that will be the case. you all are better experts at what the market will do than i am, but if you remember when they couldn't pass t.a.r.p. funding back in '08, the market went way down and there have been other instances, the debt

ceiling in recent memory, where when congress can't act the administration can't act, the government doesn't act there's a harsh reaction on wall street which brings people back to their senses pretty fast. so my thought is in the lake duck they won't get this done but they'll kick the can down the alley in some way. but in the first three to six months of next year i think they've got to get a deal done and it needs to be a big enough deal to give us a clear path over the next ten years. >> president's going to meet with congressional leaders tomorrow. the markets will be watching that awfully closely. you've been in those types of meetings before. do you think the public rhetoric and the conversation that boehner and obama are having publicly matches what's going on privately? >> i've been encouraged so far. i think john boehner has made some really good statements. i think the president has made some good statements. one of the things that i learned was that you have to keep a couple of things in mind.

deficit reduction in the end is political poison for the people that have to vote for it and so we really need to encourage the public, not just the decision makers, but the public to understand that this is an exercise in short-term pain to get long-term gain. that the objective here is to get a growing economy, jobs created in the united states, get our economy moving robustly again and that we've got to get our budget straightened out to help do that. the other thing you have to remember is you've got 535 people in the congress. this is not just the leaders so the administration has got to engage a large number of those people, if not all of them, in an exercise where they analyze together the actual concrete steps you have to take to get the budget straightened out. >> problem is many of those

members, or at least some of them, have spoken publicly, within who have said maybe going over the fiscal cliff for a little while is okay. >> well, you know, people always do that. that's your leverage so you say, well, we'll try to negotiate but maybe we ought to go off the cliff. i don't think people are really going to want to do that. i think they're going to know that that can have a very serious impact on the economy. the economy is still fragile. we don't have robust growth yet. while people will posture and try to create as much leverage in the negotiation as they can, at some point they got to get behind closed doors and really work out the details, the specifics, of what you really have to do to get the budget in order. >> what at the end of the day a deal is going to look like? a lot of folks who watch this program and other programs on this very network who worry about capital gains taxes going up, who worry about dividend tax

policy changing, and it is affecting the way that they buy stocks right as they listen to you, sir. >> well, i think what everybody has to do is take a deep breath and understand that this is shared sacrifice. i mean everybody has got to get hit, whether you're rich or in the middle class or you're poor or you're depending on entitlements. everybody's got to pay a price in this thing in order for it to get the compromise that you need to get the votes to make it work. i think if they can do tax reform in the context of overall budget change, that would be a great thing. whether or not it will affect dividends and capital gains, i don't know. i guess my best guess would be there could be some slight increase in the amount that people have to pay in capital gains tax and pay on dividends but i don't think it will go back to the way it was maybe 10,

12 years ago. i think they'll find a middle ground, a way to do this. and again, you got to remember the goal here is not getting the budget straightened out. the goal is using that as a means to get the economy to grow. if you think that dividend treatment and the tax code and capital gains treatment is pretty important in that whole idea of getting economic growth, you're not going to want to raise the rates on that very much. >> sir, appreciate your time very much. >> thank you. >> dick gephardt, of course, the former house majority leader. coming up later on at 4:00, ma rria will be with simpson an bowles together. find out what they think is going on now with the negotiations and all the rhetoric in washington. again, simpson and bowles together with maria 4:00 today. coming up, we're looking to trade other countries with big debt issues. your "money in motion" trade is up next. ♪

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welcome back. the euro is higher against the dollar today despite word from a policy group that the eurozone has fallen back into recession. willie williams trades currencies joining us now live. what are you trading day and what are your levels? >> i like selling euro/yen at 104 with a stop loss at 106 with a top loss of 100.

i think the yoeuro/dollar rate a function of strength. if we look at three-year german spanish threads, they indicate we're not at the stress levels we had had before so euro/dollar might have some support. >> willie, thanks so much. appreciate it very much. willie williams. you got more currency trades every friday night at 5:30 p.m. here on cnbc with "money in motion." our final trades are after the break. ♪ ♪ ♪ [ male announcer ] 'tis the season to discover the kid in all of us. the memories that last, start with the gifts that last. ♪ enjoy free shipping and great values on your holiday shopping from l.l.bean.

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can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery. final trades. >> verizon, 5% dividend yield. >> target. >> chevron long. like the yield. >> lamb research puts. i'm long them. catch more "fast money" at 5:00 tonight. follow me on twitte twitter @scottwapnercnbc. we continue to look at a market selling off here, not far off the lows of the day be, dow